1. Field of the Invention
The present invention is directed to a method of forecasting the short run trend of a financial variable and, in particular, of forecasting performance of investment instruments such as stocks, bonds, commodities, etc.
2. Description of the Related Art
With the development of statistical analysis and the long-standing interest in the performance of the financial markets, numerous methods have been developed and utilized in an attempt to forecast future trends of financial variables, such as the prices of stocks, bonds and commodities. Such methods typically apply financial analysis tools characterized by a high degree of statistical rigor without consideration of the actual past occurrences affecting the financial market. Trends in financial markets are a mixture of rational and irrational factors. Existing forecasting tools which are grounded in technical data analysis, such as moving averages, momentum indicators, pattern graphs or theories about cycles or periodic waves are based on ineffective algorithms which yield ineffective results.